Not only did activity pick up significantly from the
prior month, equity investments regained their luster in
what Hewitt described as the ‘most bullish transfer month
since January 2000.’ Transfers favored equities on a
net basis on 65% of the trading days in March (13 out of
20), compared with 70% in January 2000. A month ago
transfers favored fixed income investments on 14 of 19
trading days (see
Participants Still
Seeing Shadows in February
).

Average daily net transfers were 0.08% of total
balances, slightly above the typical 0.07% pace for the
Index, which tracks some $1.5 billion in plan assets.
Hewitt notes that daily net transfer activity has trended
to a below average 0.06% of total balances since the
terrorist attacks last September.

High ‘Five’

There were five above-normal net transfer activity
days. Particularly notable were March 7 and 15, where
activity was roughly three times the normal level – and
March 28, the last trading day of the quarter, where
activity was 3.87 times normal. Somewhat ironically
in view of the rest of the month’s activity, on those three
days net trading activity favored fixed income
investments. In fact, on March 28, 85% of the net
transfer flow came from company stock – and 88% went toward
GIC/Stable Value.

Company stock continued to suffer a loss of investment –
almost half (47.60%) of the fund outflows during the month
came from that sector – though that was down from the 60%+
that fled the investment last month. Specialty/sector
funds made up another 28% of the outflow, and bond funds
were close behind with nearly 22%.

In Flux

Those funds largely flowed to large US equity funds
(28.13%). In fact, according to Hewitt, March was the
first month since November when that sector of the index
saw a net inflow. GIC/Stable Value attracted nearly
24% and small US equity drew more than 21%.
International funds, which had made up 11% of February’s
outflow, drew nearly 10% of the inflowing funds in
March.

At month end, however, company stock still comprised
more than 28% of the total balances in the index – roughly
the same as a month earlier (some part of that is not under
participant direction). Large US equity retained its
second-place weighting, with roughly 24%, both likely
boosted as much by a recovering stock market as by
contribution flows. GIC/Stable Value actually slipped
a bit, comprising just 20% of the overall asset allocation
in the index at month end.